TurkStream will need Russian gas discount deal

Subject

The Russo-Turkish intergovernmental TurkStream agreement.

Significance

An agreement signed by Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan on October 10 envisages a 31.5-billion-cubic-metres/year (bcm/y) natural gas transit line under the Black Sea and through Turkey to the Turkish-Greek border. One of two parallel pipes would supply 15.75 bcm/y gas to Turkey, replacing an existing pipeline. The second would export the same volume to European markets via a planned border 'hub' and export route yet to be announced.

Impacts

• TurkStream's extra volume will increase Turkish dependence on Russian gas but allow more supply flexibility during peak winter demand.
• Delivering more Russian gas to Central-Eastern Europe will make it more difficult for other potential gas suppliers to secure market share.
• The agreement will bring Ankara and Moscow closer and may be followed by a new deal to restart the frozen Akkuyu nuclear plant.